American Airlines CEO Robert Isom announced significant changes to the airline’s growth strategy and leadership team on Wednesday, sending the company’s shares tumbling 15%.
Isom revealed that American Airlines will slash its capacity growth in the second half of the year, reducing it to about 3.5% compared to the 8% growth seen in the first six months of 2024. This decision comes after the carrier cut its revenue and profit forecast and announced the departure of Chief Commercial Officer Vasu Raja.
The changes in strategy led by Raja, including a focus on driving direct bookings and reducing reliance on third-party sites and travel agencies, have faced criticism from some travel agencies. Raja will be leaving the company next month.
Isom acknowledged the need for a shift in approach, stating, “We’ve used a lot of sticks. We’ve got to put some more carrots in place and make sure that our product is available wherever customers want to buy it.”
The airline’s revised forecast, indicating a potential 6% decline in unit revenues in the second quarter, has raised concerns among investors and analysts. Despite the challenges, Isom emphasized the importance of adapting to meet customer needs and improve the overall booking experience.
As the peak travel season approaches, American Airlines faces a critical period of adjustment and transformation to regain investor confidence and capitalize on opportunities in the market.